Analysts are urging investors to brace for ongoing turbulence after President Donald Trump’s decision to delay 50% tariffs on EU goods, cautioning that underlying trade tensions could reignite market volatility despite a temporary reprieve.
The White House announced Sunday it would postpone implementing punitive tariffs—originally slated for June 1—until July 9 following discussions with European Commission President Ursula von der Leyen. The move came hours after Trump lashed out on social media, labeling EU trade negotiations as “going nowhere” and accusing Brussels of being a “very difficult” counterpart.
While EU Trade Commissioner Maroš Šefčovič is set to hold talks with U.S. counterparts this week, experts remain divided on whether the six-week extension signals progress or merely a tactical pause. “This window provides enough time for a framework agreement, though ironclad details may take longer,” said Holger Schmieding, Chief Economist at Berenberg Bank. He suggested a likely compromise could involve a 10% U.S. tariff on EU imports alongside limited retaliatory measures, but warned of escalated EU countermeasures if rates spike to 20-30%.
Behind Trump’s Tariff Theater
Schmieding characterized Trump as a “showman negotiator” leveraging shock tactics, yet noted the EU has shown resilience to such pressure. Meanwhile, Guntram Wolff, Senior Fellow at Bruegel, highlighted the opacity of Washington’s endgame: “The critical unknown is what Trump actually wants. The EU has tabled proposals, but the White House’s true objectives remain unclear.”
The tariff delay triggered fleeting market optimism, with sectors like tech and industrials initially rebounding. However, Zaye Capital Markets CIO Naeem Aslam likened the situation to “pausing to reload ammunition,” emphasizing that structural risks loom. “Investors are now dissecting every tweet and negotiation update,” he said. “This isn’t détente—it’s prelude. Supply chain disruptions and inflationary pressures could flare if talks devolve into a tit-for-tat tariff war.”
Aslam’s warning echoed broadly among analysts: While the July 9 deadline offers breathing room, markets must prepare for whiplash. Brussels’ phased tariff-reduction proposals now face Trump’s unyielding “America First” stance, setting the stage for a high-stakes diplomatic chess match. For businesses and investors alike, the message is clear—keep seatbelts fastened through what promises to be a bumpy summer of trade brinkmanship.
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